Taichung, Dec. 23 (CNA) Taiwan's failure to sign a tax agreement with China in just-concluded cross-Taiwan Strait negotiations is not necessarily a bad thing for Taiwan and proves that the deal will have to gain more support before being signed, according to experts.
Representatives from Taiwan and China inked three agreements Tuesday on agricultural inspection and quarantine cooperation, industrial standards testing and certification cooperation, and fishery labor cooperation.
A fourth item on the agenda -- an agreement on the avoidance of double taxation and strengthening of tax cooperation -- was not signed, as the two sides failed to reach consensus, citing "technical issues." The development marked the first time since cross-strait talks resumed last year after a nine-year hiatus that an agreement on the agenda was not signed.
"China never presumes it has to reach concrete results before entering any negotiations, " said Kenneth Lin, an economics professor at National Taiwan University.
Lin said the failure to sign the tax agreement is not necessarily bad for Taiwan because the country in the past has always asked for something solid in negotiations, even though it could end up to be a disadvantage.
"Not being able to sign the agreement... is not necessarily a bad thing for us. We don't have to set a deadline and tie our own hands, " he said.
The technical issues that were said to hamper the bilateral talks, Lin said, could still be political issues rather than tax revenue problems.
Most Taiwanese businessmen investing in China do so through companies in a third country to avoid being taxed, Lin went on, adding that Taiwanese businessmen are mostly concerned that "China has been using tax inspections as tool to pester Taiwanese businesses in China." Tax agreements are usually signed between allies, friendly countries or countries at similar levels of economic development, but that is not the case between Taiwan and China, Lin said.
"I would say that the key here is not tax issues but political issues, such as the wording of the document, " he said.
"At the end of the day, a government has to protect its own taxpayers, " Lin noted.
However, other experts looked at the negotiations, which took place in the central Taiwan city of Taichung from Dec. 21-23, in a different light.
Yin Nai-ping, a finance professor at National Chengchi University, said the "technical issues" that doomed the tax talks were related to the avoidance of double taxation.
"I believe that Taiwan made the request to include Taiwanese businesses investing indirectly in China through a third country on the double taxation list in the negotiations, but China refused to accept this, " Yin said.
Yin said the sovereignty issue is not as serious as it might seem and that "the real problem is the sophisticated tax regulations." Taiwan's opposition parties have questioned whether taxpayers' information could end up in the hands of the Chinese authorities once an agreement on tax cooperation takes effect, which raised concern among local businessmen, Yin said.
"I think the widespread uneasiness over the issue made Taiwanese officials particularly cautious in the talks, " he added.
It is only natural to differ in the process of negotiations and "the most important thing is to identify the argument and ultimately work out a solution that both sides can accept, " Yin said.